EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 308
Issued by authority of the Assistant Minister for the Environment and Water Resources
Renewable Energy (Electricity) Act 2000
Renewable Energy (Electricity) Amendment Regulations 2007 (No. 2)
Section 161 of the Renewable Energy (Electricity) Act 2000 (the Act) provides that the Governor-General may make regulations prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act provides the legislative framework for the implementation of the Government’s mandatory renewable energy target, announced by the Prime Minister on 20 November 1997. The mandatory renewable energy target is designed to increase the amount of electricity in Australia that has been generated from renewable energy sources. By 2010, an additional 9,500 gigawatt hours (GWh) of electricity will be required to be supplied from renewable energy sources.
Under the Act, wholesale purchasers of electricity (the ‘liable parties’) are required to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market. The Act provides for the creation of renewable energy certificates by generators of renewable energy. One renewable energy certificate represents the equivalent of one megawatt hour of electricity generated from eligible renewable energy sources. The renewable energy certificates, once registered, are traded and sold to the liable parties, who, in turn, surrender the renewable energy certificates to the Renewable Energy Regulator, or pay a penalty. The number of renewable energy certificates to be surrendered by a liable party is determined by multiplying the amount of electricity purchased by the liable party by that year’s Renewable Power Percentage (RPP), as prescribed in the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations).
The purpose of the Regulations is to amend the Principal Regulations to specify the RPP for 2008. The RPP is determined by analysing the amount of total liable purchases, assumed growth in electricity, under and over compliance, and the estimated liability for the future year. The RPP for 2008 will be 3.14 percent, increasing from 2.70 percent in 2007 and 2.17 percent in 2006.
Subsection 39(1) of the Act provides that the RPP for a given year must be specified in the regulations on or prior to 31 March in that year. However, subsection 39(3) provides that, before the Governor-General makes a regulation under subsection 39(1), the Minister must take into consideration the required amount of renewable electricity for the year, the estimated amount of electricity to be acquired for the year, and the amount by which the required GWh of renewable source electricity for previous years has exceeded, or has been exceeded by, the amount of renewable electricity required under the scheme in those years.
The Regulations allows the 2008 RPP of 3.14 to be set under Regulation 23. Regulation 23 to the Principal Regulations is amended every twelve months and the amendments are machinery in nature and do not substantially alter the existing operation of the Principal Regulations. Consequently a public consultation period was not conducted for the Amendment Regulations.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on the day after they are registered on the Federal Register of Legislative Instruments.
Overview
The Renewable Energy (Electricity) Amendment Regulations 2007 (No. 2), issued under the Renewable Energy (Electricity) Act 2000, aim to address the legislative requirements for setting the Renewable Power Percentage (RPP) for the year 2008. Enacted by the Australian Parliament, the 2000 Act established the framework for implementing the government's mandatory renewable energy target, designed to increase the proportion of electricity generated from renewable sources. The objective of the 2007 Amendment Regulations is to ensure compliance with the Act by specifying the RPP for 2008, which is determined through analysis of various factors including total liable purchases and estimated future liability. This amendment reflects a gradual increase in the RPP from 2.70 percent in 2007 to 3.14 percent in 2008, facilitating the transition towards meeting the renewable energy target.
Scope and Application
The Renewable Energy (Electricity) Amendment Regulations 2007 (No. 2) apply to wholesale purchasers of electricity, referred to as ‘liable parties’, who are required to meet a share of Australia’s renewable energy target proportionate to their share of the national wholesale electricity market. These Regulations amend the Renewable Energy (Electricity) Regulations 2001, which form part of the legislative framework established by the Renewable Energy (Electricity) Act 2000. The primary purpose of these Regulations is to specify the Renewable Power Percentage (RPP) for the year 2008, which determines the renewable energy certificates that liable parties must surrender or pay a penalty for. The RPP for 2008 is set at 3.14 percent, reflecting an increase from previous years, and is calculated based on total liable purchases, assumed growth in electricity demand, and compliance records. The Regulations, which are a legislative instrument under the Legislative Instruments Act 2003, commenced on the day after their registration on the Federal Register of Legislative Instruments. They are made under the authority of the Assistant Minister for the Environment and Water Resources and do not substantially alter the operation of the Principal Regulations.
Key Provisions
The Renewable Energy (Electricity) Amendment Regulations 2007 (No. 2) primarily amend the Renewable Energy (Electricity) Regulations 2001 by specifying the Renewable Power Percentage (RPP) for the year 2008, as per Regulation 23 (subsection 39(1) of the Act). This percentage is set at 3.14%, reflecting an increase from 2.70% in 2007 and 2.17% in 2006. This regulation is crucial as it dictates the proportion of electricity that wholesale purchasers of electricity, referred to as 'liable parties', must source from renewable energy sources. This percentage is determined by taking into account the required amount of renewable electricity for the year, the estimated amount of electricity to be acquired, and the extent to which previous years' requirements have been met (subsection 39(3) of the Act).
The obligations imposed on liable parties by the Act and these Regulations include ensuring that a portion of their electricity purchases is sourced from renewable energy. This is evidenced by the requirement to acquire and surrender renewable energy certificates (RECs) to the Renewable Energy Regulator. One REC represents one megawatt hour of electricity generated from eligible renewable sources. Liable parties must calculate the number of RECs they need to surrender based on their electricity purchases multiplied by the annual RPP. Failure to surrender the requisite number of RECs results in the liable party either having to pay a penalty or face potential legal consequences.
Breach of the requirements outlined in the Act and the Regulations can lead to significant civil and criminal consequences. For instance, liable parties that fail to meet their renewable energy obligations may be subject to financial penalties. The maximum penalties for non-compliance are stipulated in the Renewable Energy (Electricity) Amendment Regulations 2007 (No. 2) and can include fines that are substantial enough to enforce compliance. Additionally, ongoing failure to comply with these obligations can result in legal actions being taken against the liable parties, thereby reinforcing the importance of adherence to the regulatory framework established by the Act and the Regulations.